Category Archives: ecommerce

Cuba’s Internet and Castro

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I recently wrote a paper on internet diffusion and adoption in Cuba and thought it would be appropriate to share on the day of Castro’s death. The hope is that Cuba will have the opportunity to share in the world’s communication and add to the important discussions that need to take place as we enter a new time of uncertainty.

Here is the introduction and a link to the full text of the article:

Internet Diffusion and Adoption in Cuba

Cuba is one of the last countries in the world to provide online access for its citizens in spite of the economic advantages that connectivity brings to economies. As the country opens opportunities for citizens to engage in business and potential trade with the United States
grows the Internet could help boost economic output for the country.
The article argues that Cuba’s educated population who have a strong desire to interact with the rest of the world will take full advantage of opportunities that are given by the government.  The conclusion suggests that Cuba is ready.
The results of this analysis suggest that Cuba is poised for Internet growth as long as the government continues to open access for residents. The Internet in Cuba blog by Larry Press suggests that the government may legitimize the SNET, the network that runs from Cotorro to Bauta that the government has chosen to ignore for the past 8 years (Press 2016). There are also reports of proposals from US and non US companies to build an Internet cable between Miami and Havana (Press 2016). In either case, the Cuban government has made moves toward increasing access.
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Bloglette: Google Analytics for Strategy

LaTienda, a brand of Spanish specialty foods used Google Analytics to determine whether shipping costs affected  retailers’ likelihoods to abandon their shopping carts due to the shipping costs. After segmenting customers by region, La Tienda determined that stores from Region B were 48% less likely to complete the purchase than those in Region A, in which shipping costs were lower. As a result La Tienda implemented flat rate shipping for Region B and completed transactions increased 70%, while conversions did not change in Region A.

The full case is available from Think Google. I use these cases in my courses to illustrate the importance of making informed decisions.

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The Customer Experience and Profitability

One of my favorite podcasts is Internet Marketing by Kelvin Newman and Andy White of Site Visibility.  I have learned so much from them about online marketing, search engine optimization, social media and mobile marketing.  Much of the knowledge I have incorporated into my classes.

This week Andy interviewed Rosie Freshwater of Leapfrogg, a UK company specializing in customer experience marketing.  The content was directly related to my prior blog post on customer lifetime value so I thought I would share it with you.  Rosie talked about how her firm uses customer lifetime value to segment the buyers and then customize marketing efforts for the different segments.

The process for evaluating the segments is as follows:

  1. Mine Google Analytics data to determine buying patterns of your customers and segment them by their value to you.
  2. The value is based on an analysis of how much a customer spends, how often he or she buys and your expenses in serving that person.
  3. Ask each customer a question to determine their level of commitment to your product or service: On a scale of 1-10 how likely would you be to recommend our business to a friend?  Provide the number one reason why.
  4. You now have groups of customers telling you whether they like you or not and why. This information can be used to improve the poor experiences and elevate the good experiences.
  5. Map the optimal customer experience for each segment.

Rosie Freshwater indicated that by using this technique she discovered that if a client offered free shipping sales and profits would increase. For another client she discovered that email was a much more effective form of communication than social media.

In general, social media may or may not be the right strategy for a particular segment.  Like all communications the decision to use a particular media depends on the target market and their level of engagement with the medium. Social media isn’t free and spending on other types of promotions may be more effective and efficient.

In closing the podcast makes the important point for businesses: Grow profitable sustainable revenue, not just revenue.

Here is a link to download the entire podcast.

Thanks to Kelvin Newman, Andy White and Rosie Freshwater.

Customer Lifetime Value and Service

Zappos.com
Zappos.com (Photo credit: Wikipedia)

I recently wrote to Zappos because a pair of sneakers I bought were not waterproof. In less than 24 hours I received the following response:

Hello Randi,

Thank you for contacting Zappos VIP Customer Loyalty Team. I am Diana, your Email Guru and I’m here to help you today.

I hope you are keeping warm on this chilly New York night. Personally, I find that a mug of hot cider and a fluffy blanket usually does the trick!

I am sorry to hear that the sneakers you purchased from us are not what you were expecting. That’s definitely not something that we like to hear about our merchandise, and is not indicative of the high quality of service and products we strive to provide our customers. I am glad that you wrote us right away so we can immediately address this situation.

Because I would hate for you to wait for your refund as this was unacceptable, Randi, I went ahead and refunded you in full today for this item. Please keep in mind, it can take up to 2-10 business days for the refund to be reflected in your account depending on your financial institution.

I hope this email helps to bring you peace and clarity and if there is anything else we may be able to help you with, please don’t hesitate to let us know!

Thank you so very much from your Email Guru,

Diana S.
Customer Loyalty Representative
Zappos Customer Loyalty Team

It occurred to me that not only was Zappos customizing by my location they were likely determining my value as a customer. Deciding whether I was “worth” a return. By calculating customer lifetime value the brand can estimate a customer’s future profitability and activate an appropriate customer service response. Lucky for me I am a good customer and estimate that I could spend $3,000 with Zappos over the next 20 years. Though that number does not include Zappos’s expenses to serve me it also does not include any positive word of mouth I might generate for the firm, such as this blog post.

The Upsell

Zappos also makes use of email to encourage people to buy more of what it offers.  The email closed with the following:

Did you know Zappos.com sells clothing? Check it out: http://www.zappos.com/clothing.htm
Come take a tour next time you’re in Las Vegas: http://www.zappos.com/tours

Zappos could do a better job with this section of the email. I would recommend adding a visual here because  I missed it when I scanned the response.  It is no secret that people do not read their email carefully.

Helpful Tool

Harvard Business School offers a customer lifetime value tool to help determine the dollar value of your customers.  To use the tool you will need to determine:

  1. Number of Purchases per Year
  2. Average Spend per Purchase
  3. Direct Marketing Costs per Customer
  4. Gross Margin
  5. Average Customer Retention Rate
  6. Annual Discount Rate – this figure takes into account the time value of money recognizing that a dollar today is worth more than future dollars.  Some people use the interest rate here.

This is the kind of service people expect and that firms can deliver…to the ‘right’ customers. Zappos customer service is legendary.

How do you feel about Zappos customer service?  Take the poll here: